The hallway meeting, after the meeting in the boardroom.
In the bar after work.
The CEO’s walk to the parking lot with the COO.
On the golf course.
Our clients tell us that this is where the deals get done and real decisions get made.
In many companies we see leaders working around the formal organization’s decision processes – or the organizational governance structure, rather than within it.
In theory, organizations should have a set of authority structures, processes, and rules in place that govern how decisions get made, resources get allocated, and priorities get set. But in reality, most don’t. Usually, there is no “formal” governance design or the one that exists gets ignored because it’s too complicated to be effective, or the rules keep changing depending on which leader’s turn it is to “get their way.”
The problems with dysfunctional governance are endless. Opportunity costs are high. Well-functioning governance can be a potent lever for driving performance in an enterprise. In organizations that get it right, leaders understand their spheres of power and have clarity around the decision rights that are theirs to exercise.
People are deployed to perform optimally. Information and decision-making flow at the right levels. And time and resources aren’t habitually wasted.
Organizational governance structures that drive success
So how do you get the kind of governance structure that drives success? For many businesses, it starts with a good hard look at what’s really adding value in your organization—and what isn’t.
1. Have you intentionally built your organization’s governance?
In other words, have you taken the time to really think about and map out what your governance model is and how it works? If not, and decisions in your company just sort of happen without any defined or formal process, then you can bet that there are inefficiencies and misconceptions that are keeping you from achieving optimal levels of performance.
If you hear things like, “Did we actually make a decision?” after meetings, or “Our priorities change by the day,” you are hearing symptoms of poorly or undersigned governance.
2. Did you inherit bad governance?
Many people inherit their organization’s governance—a series of meetings, list of initiatives, and behaviors around meetings and decisions— when they assume their leadership role. They don’t think to stop it or re-do it.
Like layers of past wallpaper in an old house, organizations just glue on new layers of governance over what already exists. As a result, governance becomes bewilderingly complex. And people continue to survive or work around it when they should be redesigning it.
3. Are you falling victim to process supremacy?
Sometimes leaders assume that the hierarchy symbolized by organization charts, process documents, and procedures is the way work actually gets done and decisions get made. But accepting and following these documents without getting into the intent behind them leads to ritualized behavior instead of value-producing activities.
So if you’re holding meetings just because a process document says to, but no actual value comes from the meeting, then perhaps it’s time to rethink the process.
4. Do you have a proliferation of committees and task forces that you don’t really need?
Organizations have a tendency to convene committees to deal with persistent issues that arise from bad governance. If there isn’t a formal structure within the organization for achieving goals and objectives, then a committee is created and charged with the task, often working outside the official parameters of the business.
In many cases, those committees take on lives of their own, functioning long after their useful timeframe, and sucking up resources that could be much better allocated within your organization.
5. Are your meetings for show-and-tell instead of productive work?
Whenever we see bad governance in an organization, we see dysfunctional meetings. Ideally, senior leaders should only be convened for the purpose of maximum participation. Instead of discussing items that can be read in advance, they can focus on value-added work that only they can accomplish together.
But instead of promoting this thoughtful design of leadership decision making, problem-solving, and learning, many meeting agendas are crammed with discussion topics or status reports from various departments.
Oftentimes, participants are only half-listening at best until it’s their turn to report. Think about it, how many times are your meeting participants more intent on their iPhones than on what is being discussed?
6. Is your decision-making process set up for success?
When organizations have problems making decisions, it’s often because the right people aren’t involved in the process. Having the “right people” means linking a leader’s proximity to the below to determine decision rights:
- Requisite information,
- Authority,
- Resources, and
- Relationships
When leaders have proximity, but no authority, or authority without the needed resources, or control of the budget but not the people, and so on, the disaggregation of all the decision components renders a decision weaker, and many times impossible to implement.
Organizational governance structures
Considering these aspects of governance can tell you where the major problems exist with your current governance model. From there, you can make the necessary strategy development and nips and tucks to clean up your structure. Or you can jumpstart a complete governance overhaul if needed.
Either way, when you give governance design the time and attention it deserves, you’ll be rewarded with less waste, greater productivity and performance, and a better bottom line.